RGC Resources, Inc. (NASDAQ:RGCO) Q1 2024 Earnings Call Transcript
RGC Resources, Inc. (NASDAQ:RGCO) Q1 2024 Earnings Call Transcript February 7, 2024
RGC Resources, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Tommy Oliver: Good morning, and thank you for joining us as we discuss RGC Resources Inc.'s 2024 First Quarter Results. I am Tommy Oliver, Senior Vice President, Regulatory and External Affairs for RGC Resources. I'm joined this morning by Paul Nester, President and CEO of RGC Resources and Tim Mulvaney, our Treasurer and Chief Financial Officer. [Operator Instructions] Let me review a few administrative items before we get started. [Operator Instructions] The link to today's presentation is available on the Investor and Financial Information page on our website at www. rgcresources.com. The conclusion of the presentation and our remarks, we will take questions. So let's transition to Slide 1. This presentation contains forecasts and projections.
Slide 1 has information about risks and uncertainties, including forward-looking statements that should be understood in the context of our public filings. Transition to 2. Slide 2 contains our agenda. We will review our quarterly operational and financial results and discuss outlook for full year fiscal 2024 with time allotted for questions at the end. Turning to Slide 3. Main extensions for the quarter totaled just under a mile, and we connected 185 service lines. Total customers were 63,319 at the end of the first quarter. As we discussed in prior earnings calls, the customer count for 2021, 2022 were impacted by the state-mandated service disconnection moratorium that occurred during parts of 2020, 2021. When factoring this into our customer accounts for the prior four years shown in the graph on the right side of the slide, we have experienced steady growth over this period.
Transition to Slide 4, where our delivered gas volumes for the quarter, which were 9% lower compared to last fiscal year, and this is attributable to warmer weather in the first quarter of the 2024 fiscal year. As shown on this slide, gas volumes were down in total. Residential and commercial volumes were lower as a result of fewer heating degree days but that was offset by a nice year-over-year industrial utilization increase as natural gas prices remain low. So let's turn to Slide 5. Our CapEx spending totaled $5.3 million in the current quarter compared to $7.5 million last year at this time. The decline is attributable to spending for the RNG facility last year that became operational in March of 2023. When one removes the effects of the RNG spending, the year-over-year variance is approximately $500,000 spread across all categories.
Paul will discuss the full year capital spending projection shortly. I'm now going to turn it over to Tim Mulvaney, our Treasurer and CFO, who will discuss our financial results. Tim?
Tim Mulvaney: Thank you, Tommy. Moving to Slide 6. We had a strong quarter. First quarter operating income increased $1.1 million or 20% to $6.7 million compared to the first quarter of 2023. The increase was primarily driven by interim base rates that were implemented on January 1, 2023. Equity and net earnings of unconsolidated affiliates was $1.5 million pretax due to noncash AFUDC, which resulted from our investment in the MVP. This AFUDC will taper off as the construction on various sections is complete and will cease as the pipeline goes into service. Interest expense increased $268,000 due to the higher interest rate environment, which is impacting our floating rate debt, supporting the investment in the Mountain Valley Pipeline as well as the Roanoke Gas line of credit.
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